The last few weeks have been full of restless nights, intense conversations, much reflection and tireless analysis as I work through the process of purchasing the dental practice I have been part of for the last 9 months. I have created countless excel spreadsheets to look at all the possible financial scenarios that may happen after I’m the owner to make sure the numbers work. I asked my friend Gary Takacs if he would be my coach through this process, and he graciously agreed. Together we have reviewed year after year of tax returns, profit and loss statements and appraised the practice.
Any of you who have been through this are most likely experiencing all the emotions again as you read. I have felt excitement and anticipation, fear and trepidation, and most of all uncertainty. Will I be able to pull this off, am I up to the challenge, do I know what I need to know to make this work? I’ve consulted with my husband Kelly, listened to his sage advice and yet I am still left with the final choice.
Now what, after all the analysis is complete and the emotions experienced, the only thing that is left is to choose. I can’t remember when I realized that every choice in life is a simple flip of the coin. No amount of information or deliberation gives us guarantees or the ability to predict future outcomes, it simply helps us plan. It is this power, our ability to plan and then work the plan with commitment that is the greatest predictor of success or failure.
So with every decision, do the work to understand it, analyze the data and be fully informed about the situation. Spend time looking at your emotional response, what is your gut telling you? Put together a plan of action, commit to it and choose.
So here goes, owning a practice again will be an adventure!
Actually, the numbers are the easy part. As a dental specific CPA I have helped hundreds of docs assess the finances of a practice they were considering purchasing. You can determine whether or not the asking price is within a reasonable range and what your “after-tax” cash flow will be for years to come in a couple of hours. Note: May I assume you considered any addition to the Goodwill value of the practice you have made in the past 9 years?
The hard part, as you have indicated, is the emotional decision… In your case, you are familiar with the practice. In most practice sales (sales – not transitions), the parties only have a few weeks to get acquainted. You are hardly able to learn each other’s names in that time and the bloom will stay on the rose until after you have executed all the agreements.
Evaluating the practice from a personal perspective is difficult. However, with good counsel from all the relevant parties/professionals (Spouse or Partner, Mentor, CPA, Attorney, Banker, etc.), the decision should be easier. The important steps here are to interview the staff, spend as much time in the office as possible and have a number of meetings with the selling doctor and thier spouse. This is important interaction and any little red flags that pop up should not be ignored. Once I had a dentist suggest that I tell prospective buyers to talk to the seller’s lab person about their work. Not sure whether or not that is ethical.
Final thought… I have seen this many many times. As soon as you sign on the dotted line, you will undergo a change. You have made a huge commitment – a life decision – and somehow, this information gets transmittied to whatever spot in your brain that makes you just a little more responsible and capable. Suddenly, you can do more dentistry and you pay attention to the business of your practice. This doesn’t mean you are “there” yet, but you are well on your way.
Haden,
Thanks for all of this valuable input, and you are correct there is something about your energy that shifts once you make the decision!
Knowing you the way I do, you will excell at anything. You could take even the most negative situation and make it a winner! It’s your attitude, and your infectious ability to inspire those around you! Congratulations. Yes, it’s always scary (this is my third practice), but it is so rewarding!
Thanks Muna!!! Any and all pep talks are appreciated!
Hello Dr. Brady
I stumbled onto your site and it’s quite informative. I was wondering if you can provide your opinion. I’m a general dentist and planning on moving to another state and buying an office instead of looking for an associate position first. What do you think? I’ve always worked as an associate. Any tips on what to look for when I am buying an office?
Thank you,
Mary
Mary,
I think there are many advantages to buying an office and yes there are a lot of things to know and questions to ask. Working with an expert on dental practice transitions is a great idea so they can help you through the process. What state are you thinking of moving to?
Lee